Exhibit 10.5
CONSENT, ASSIGNMENT AND ASSUMPTION
AND AMENDMENT OF MANAGEMENT AGREEMENT
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THIS CONSENT, ASSIGNMENT AND ASSUMPTION AND AMENDMENT OF MANAGEMENT
AGREEMENT ("Agreement") is entered into this ___ day of __________, 1998, but
effective for all purposes [January 1, 1999] by and among, [Affiliated Entity
Wholly-Owned and Controlled by Host Marriott, L.P. or Host Marriott, L.P.]
("Owner")], [Crestline Capital Corporation Subsidiary], a Delaware limited
liability company having an address at 00000 Xxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx
00000 ("Lessee"), and [Marriott International, Inc./Marriott Hotel Services,
Inc.], a Delaware corporation having an address at 00000 Xxxxxxxx Xxxx,
Xxxxxxxx, Xxxxxxxx 00000 ("Marriott").
WITNESSETH:
WHEREAS, Owner holds fee simple [or leasehold] title to the parcel of real
property described in the Lease (hereinafter defined) containing a hotel
building or buildings and certain related facilities (collectively, the
"Hotel");
Recitals for Hotels Currently owned by Host:
[WHEREAS, the Hotel was formerly owned by Host Marriott Corporation
("Host"), and Host and Marriott previously entered into the management agreement
described in Exhibit B attached hereto for the management of the Hotel by
---------
Marriott (the "Management Agreement"),]
[WHEREAS, the Hotel was transferred by deed from Host to Owner and the
Management Agreement was assigned to and assumed by Owner, and Owner and Lessee
have entered into a lease of the Hotel on _________, 1998, with a commencement
date specified therein (the "Lease"), a copy of which is attached hereto as
Exhibit A.]
----------
Recitals for Hotels Currently Owned by Wholly-Owned Subsidiaries of Host,
including HMH Properties, Inc.:
[WHEREAS, the Hotel was formerly owned by ______________ ("Former Owner"),
and Former Owner and Marriott previously entered into the management agreement
described on
Exhibit B attached hereto, for the management of the Hotel by
---------
Marriott (the "Management Agreement")]
[WHEREAS, pursuant to Articles of Merger dated __________, 1998, Former
Owner was merged into Owner, and in such merger, by operation of law, the Hotel
was transferred to Owner and the Management Agreement was assigned to and
assumed by Owner;]
[WHEREAS, Owner and Lessee have entered into a lease of the Hotel on
__________, 1998, with a commencement date specified therein (the "Lease"), a
copy of which is attached hereto as Exhibit A;]
---------
Recitals for Hotels Currently Owned by Host Controlled Partnerships:
[WHEREAS, Owner and Marriott previously entered into the management
agreement described on Exhibit B attached hereto, for the management of the
---------
Hotel by Marriott (the "Management Agreement"),]
[WHEREAS, Owner and Lessee have entered into a lease of the Hotel on
_________, 1998, with a commencement date specified therein (the "Lease"), a
copy of which is attached hereto as Exhibit A;]
---------
Recitals Applicable to All Agreements:
WHEREAS, the management of the Hotel pursuant to the Management Agreement
is of material benefit to Lessee and Owner, and Lessee and Owner desire that the
Hotel continue to be managed thereunder, subject to the terms hereof; and
WHEREAS, Manager would not have consented to the lease of the Hotel
pursuant to the Lease or the assignment of the Management Agreement to Lessee
without Owner and Lessee entering into this Agreement, and Owner and Lessee
desire to so enter into this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties, the parties hereto
agree as follows:
[N.B.:ALL OF THE FOLLOWING MUST ULTIMATELY BE CONSISTENT WITH THE LEASE TERMS.]
1. Assignment and Assumption of Management Agreement. For and during the
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term of the Lease (subject to early termination of the Lease in accordance with
its terms), but not thereafter, Owner assigns unto Lessee the Management
Agreement, and all Owner's right, title and interest as "Owner" thereunder, and
Lessee hereby accepts such assignment and hereby assumes and agrees to perform
all of Owner's obligations as "Owner" under the Management Agreement for and
during the term of the Lease as aforesaid; provided, however, that (a) the
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specific obligations of "Owner" under the Management Agreement identified in
Exhibit C-1 attached hereto (the "Retained Obligations") shall at all times
-----------
apply only to and remain the direct and sole obligations of Owner, subject to
enforcement by Marriott directly against Owner, (b) the specific rights of
"Owner" under the Management Agreement identified in Exhibit C-2 attached hereto
-----------
(the "Reserved Rights") are reserved to and shall be exclusive to and
exercisable only by Owner, (c) the specific rights of "Owner" under the
Management Agreement identified in Exhibit C-3 attached hereto shall be
-----------
exercisable during the term of the Lease by each of Owner and Lessee as to
itself only (as such rights apply to Owner, the "Continuing Rights"); and (d)
subject to the provisions of Section 2, the specific obligations of "Owner"
under the Management Agreement identified on Exhibit C-4 attached hereto (as
-----------
such obligations apply to Owner, the "Continuing Obligations") shall apply to
and be binding upon Lessee as to Lessee's own acts or omissions during the term
of the Lease and shall also continue to apply to and be binding upon Owner as to
Owner's own acts or omissions during the term of the Lease.
Subject to the foregoing provisions of this Section 1, all of Owner's
rights, benefits and privileges with respect to the Management Agreement shall
be vested in Lessee throughout the term of the Lease; provided, however, that
without limiting any of the obligations set forth in Section 5 hereof, upon
termination of the Lease, for whatever reason, all of Owner's rights, benefits
and privileges under the Management Agreement with respect to periods after such
termination shall automatically revert to Owner (and Lessee shall have no
obligation under the Management Agreement with respect to periods after such
termination), without the necessity of any action on the part of Owner, Lessee
or Marriott.
To the extent that any of the provisions of the Management Agreement impose
a greater or inconsistent obligation on Lessee than the corresponding provisions
of the Lease, then Lessee shall be obligated to comply with, and to take all
actions necessary to prevent breaches or defaults under, the relevant provisions
of the Management Agreement. Notwithstanding anything contained herein to the
contrary, Lessee shall perform and comply in every respect with the provisions
of the Management Agreement (except for the Retained Obligations and Continuing
Obligations which, as between Lessee and Owner, shall remain the sole
responsibility of Owner) so as to avoid any default thereunder during the term
of the Lease.
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2. No Release of Owner. Owner expressly agrees, for the benefit of
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Marriott, that, anything herein contained to the contrary notwithstanding: (a)
Owner shall at all times remain obligated to perform all the duties and
obligations of "Owner" under the Management Agreement to the same extent as if
the assignment to Lessee hereunder had not been made; and (b) the exercise by
Lessee of any of the rights assigned hereunder shall not release Owner from any
of its duties or obligations to Marriott under the Management Agreement except
to the extent that such exercise by Lessee constitutes full performance of such
duties and obligations; provided, however, that the foregoing shall not relieve
Lessee of its obligations to Owner under the Lease or Section 1 hereof in
connection with the assignment and assumption of the Management Agreement.
3. Consent by Marriott. Marriott hereby consents (a) to the assignment by
-------------------
Owner to Lessee of the Management Agreement and all of Owner's right, title and
interest as "Owner" thereunder and the acceptance and assumption thereof by
Lessee, in accordance with and subject to the terms of this Agreement, (b) to
the execution, delivery and performance by Owner and Lessee of the Lease and (c)
to the sale of Excess FF&E (as defined in the Lease) from Owner to Lessee or a
third party and to the sale of Working Capital (as defined in the Lease) from
Owner to Lessee, in each case in accordance with the Lease and (d) to the sale,
on the date hereof, of the FF&E listed on Exhibit D to [insert name of
---------
Non-Controlled Subsidiary].
Except as provided in Section 4 hereof, the Management Agreement is not
intended to be modified or amended hereby, and nothing in this Section 3 or any
other section herein, other than Section 4 hereof, shall be deemed to modify or
amend the Management Agreement.
4. Amendments to Management Agreement. The parties hereto do hereby
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consent and agree to the following amendments to the Management Agreement to be
effective as of the Commencement Date:
(a) Section 20.03 is hereby deleted in its entirety and the following is
inserted in lieu thereof:
"20.03 Manager As Independent Contractor
---------------------------------
A. Notwithstanding any other provisions of this Agreement, including,
without limitation, the provisions of Section 2.01, in the performance of
this Agreement, Management Company shall act solely as an independent
contractor, except that in the performance of this Agreement, Management
Company shall have all fiduciary duties of an agent to a principal under
applicable
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law and Owner shall have all fiduciary duties of a principal to
an agent under applicable law. Neither this Agreement nor any agreements,
instruments, documents or transactions contemplated hereby shall in any
respect be interpreted, deemed or construed as making Management Company a
partner, joint venturer with, or agent of, Owner, except that, in the
performance of this Agreement, the Management Company will have the
fiduciary duties of an agent and the Owner will have the fiduciary duties
of a principal. Owner and Management Company agree that neither party will
make any contrary assertion, claim or counterclaim in any action, suit,
arbitration or other legal proceedings involving Owner and Management
Company.
B. Owner and Management Company agree that the Hotel is a unique
property, that Management Company's and Owner's mutual agreement to
incorporate the Hotel into the Marriott Hotel System provides Owner and
Management Company with a unique opportunity, and that Management Company
and/or Owner shall be irreparably damaged in the event that this Agreement
is terminated for any reason other than a termination due to expiration of
the term or other termination expressly allowed under the terms hereof.
Accordingly, each party shall be entitled to equitable relief, including
specific performance and injunctive relief, to enforce the terms of this
Agreement. In addition, the parties agree that no asserted right of
termination by either party shall be effective against the other party
until the party asserting the right of termination has obtained either (i)
a judgment or order of a court of competent jurisdiction confirming the
right of such party to terminate this Agreement (which judgment or order
need not be final or nonappealable), or (ii) a consent of the other party
to such right of termination.
C. Notwithstanding the relationship created by this Agreement
(including but not limited to, the provisions of Section 20.03A), except to
the extent specifically set forth to the contrary in Section 20.12, nothing
contained herein shall prohibit, limit or restrict Management Company or
any of its Affiliates from developing, owning, operating, leasing, managing
or franchising hotels in the market area where the Hotel is located, and
Management Company and its Affiliates hereby specifically reserve the right
to do any of the foregoing."
(b) With respect to any future amendments of the Management Agreement, any
such amendments shall require the consent of Owner (unless otherwise permitted
by the Lease), Marriott, and, prior to the termination of the Lease, the Lessee.
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(c) Notwithstanding anything in the Management Agreement to the contrary,
subsequent to the date hereof, Management Company shall not knowingly or
intentionally (acting in good faith) enter into any leases or subleases with
respect to the Hotel or any part thereof (1) with any individual or entity in
which Owner, Host O.P. (as defined in the Lease) or Host REIT (as defined in the
Lease) owns, directly or indirectly, a ten percent (10%) or greater interest
within the meaning of Section 856(d)(2)(B) of the Code (as defined in the Lease)
or any similar or successor provision thereto, or (2) on any basis such that the
rental to be paid by the lessee or sublessee thereunder would be based (or
considered to be based), in whole or in part, on either (x) the income or
profits derived by the business activities of the lessee or sublessee, or (y)
any other formula such that any portion of the rent payable under the Lease
would or could to Management Company's actual knowledge (acting in good faith)
fail to qualify as "rents from real property" within the meaning of Section
856(d) of the Code, or any similar or successor provisions thereto. Management
Company shall take reasonable precautions in connection with each lease or
sublease (including providing Owner with prompt notice thereof) to ensure that
such lease or sublease will not result in violation of this Section 4(c).
Management Company may, in its sole and absolute discretion, provide Owner with
a copy of any lease or sublease which Management Company desires to execute, and
Owner shall have ten (10) business days to give written notice to Management
Company indicating whether such lease or sublease would result in a violation of
the terms of this subsection (c). If Owner shall fail to give Management Company
such written notice within such ten (10) business day period, Owner shall be
estopped from claiming that such lease or sublease violates the terms of this
subsection (c).
(d) Prior to the termination of the Lease, upon notice from Owner to
Management Company pursuant to Section 3.5 of the Lease, Management Company
shall, until further notice from Owner, deposit all revenues payable by
Management Company to Lessee directly into the [Lockbox Account] (as defined in
the Lease) for the account of Lessee.
(e) Management Company agrees that any security interest encumbering
Working Capital which is granted to Management Company to secure a loan of
Working Capital made by Management Company pursuant to Section 7.01B of the
Management Agreement in addition to being subordinated to a Qualified Loan,
shall be subordinated to the lien securing the Working Capital Note (as defined
in the Lease) so long as the Working Capital Note is assigned or pledged as
collateral for any Qualified Loan.
(f) If all or any portion of the FF&E at the Hotel is leased by Lessee
pursuant to an Excess FF&E Lease (as defined in the Lease), Lessee shall require
the FF&E lessor to provide Management Company (i) notice of any "Event of
Default" by Lessee thereunder,
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contemporaneously with the giving of notice to Lessee, and (ii) a reasonable
opportunity to cure such default. Management Company, at its option, may elect
to cure such default by paying, from Operating Profit otherwise distributable to
Owner under the Management Agreement (or from funds which Management Company
would otherwise pay into the FF&E Reserve if the Hotel is not then subject to
the lien of a Qualified Loan), amounts necessary to cure such default directly
to the lessors of the Excess FF&E Leases, unless prior to the date of making
such payment, Lessee gives written notice to Management Company that there is a
dispute concerning such payments, in which event Management Company shall place
the funds it otherwise would have paid such lessor(s) in an escrow account
pending resolution of such dispute. Notwithstanding the placement of such funds
in such escrow account, Management Company may use such funds as well as
Operating Profit otherwise distributable to Owner under the Management Agreement
(and such funds which Management Company would otherwise pay into the FF&E
Reserve if the Hotel is not then subject to the lien of a Qualified Loan) to
cure any such default if such lessor has initiated any action to obtain the
ownership or possession of the FF&E. [For those Hotels subject to CMBS debt and
certain other cash flow sweep Hotels, the foregoing right to cure Excess FF&E
Lease defaults shall not apply for so long as the Hotel is encumbered by the
currently existing debt].
(g) Section 20.04 is hereby deleted in its entirety and the following is
inserted in lieu thereof:
"20.04 Confidentiality
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The parties hereto agree that the matters set forth in this
Agreement are strictly confidential and each party will make
every effort to ensure that such matters are not disclosed to any
outside person or entities (including the media) without the
written consent of the other party; provided, however, that such
consent will not be required with respect to (i) legally required
filings and other disclosures mandated by applicable law, (ii)
disclosure to any prospective and existing lenders, prospective
and existing ground lessors, or any prospective purchasers of the
Hotel, and (iii) disclosures to the parties' respective outside
legal counsel and financial advisors, provided that such persons
are informed of the confidential nature of such matters and
instructed to keep them confidential."
5. Termination of the Lease.
------------------------
The parties agree that the Management Agreement and the rights and benefits
of Marriott thereunder shall not be terminated or disturbed in any respect
except in accordance with the terms of the Management Agreement (or in
accordance with the terms of any other agreement or
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instrument binding on Marriott), and not as a result of any termination of the
Lease. Accordingly, if the Lease is terminated for any reason, including,
without limitation, expiration of the term thereof or the "rejection" thereof,
following Bankruptcy (as defined in Section 10 hereof) of Lessee (a "Lease
Termination"), Owner shall at the time of or prior to such Lease Termination
either (a) elect not to take either of the actions described in clause (b)
below, in which case all of "Owner's" rights, benefits, privileges and
obligations under the Management Agreement with respect to periods after such
Lease Termination shall automatically revert to Owner, or (b) cause an "Approved
Tenant" (as defined hereunder) to (i) succeed to and assume Lessee's rights and
obligations under the Lease, the Management Agreement and this Agreement, or
(ii) enter into a new lease with Owner in substantially the same form as the
Lease with such changes as may be negotiated between Owner and the Approved
Tenant, provided such changes do not materially and adversely restrict, limit or
interfere with the rights of Marriott hereunder or under the Management
Agreement, including without limitation (A) provide for a term which is less
than the unexpired portion of the Lease term, (B) limit or otherwise purport to
reduce, or modify in any manner adverse to Marriott, Owner's responsibility for
the Retained Obligations or Continuing Obligations or (C) amend or modify the
following provisions of the Lease: Section 132, Sections 3.16(a)-(f), Section
4.4, Section 5.1.2, Article 6, Section 17.3 and the definition of any terms used
in any such Sections or Articles (or which would otherwise be acceptable to
Marriott), and succeed to and assume the rights and obligations of Lessee under
the Management Agreement and this Agreement, the intent being that the
relationship between any successor lessee, Owner and Marriott be under the same
terms and conditions as the relationship between Lessee, Owner and Marriott
hereunder and under the Management Agreement, Operating Agreement (as defined
hereunder) and the Lease. The succession of the Lessee's interests as described
in clauses (a) and (b) above are herein referred to as a "Lease Succession."
Any successor to Lessee under clause (b) above shall be subject to
Marriott's prior written approval, which approval shall not be withheld or
delayed if such successor to Lessee meets the criteria set forth below for an
"Approved Tenant." An "Approved Tenant" is hereby defined as an entity which (i)
in Marriott's reasonable judgment, has sufficient financial resources and
liquidity to fulfill the obligations of "Owner" under the Management Agreement,
(ii) is not in control of or controlled by persons who have been convicted of
felonies in any state or federal court, (iii) is not engaged (or affiliated with
any person or entity engaged) in the business of operating (as distinguished
from owning) a branded hotel chain having five thousand (5,000) or more guest
rooms in competition with Marriott International, Inc. and its successors, (iv)
shall be a single purpose entity in which Marriott is a non-equity member with
rights which are no less favorable to Marriott than that which it has as a
non-equity member in Lessee, and which is organized and operated pursuant to an
operating agreement not substantially different from the Operating Agreement of
Lessee dated ___________, 1998 ("Operating Agreement"), or otherwise acceptable
to Marriott, and (v) which does not result in there being more than six (6)
separate, unrelated Business Entities being equity members in the single purpose
entities which are the lessees of hotels owned by Owner and managed by Marriott
International, Inc., or an affiliate thereof. As used herein, the term "Business
Entity" shall mean a business entity (the "Parent") and (a) all of the
subsidiaries which are, directly or indirectly, wholly owned by the Parent, and
(b) all of the Business Entities which directly or indirectly control the
Parent. Such approval or disapproval will be made within ten (10) business days
of request by Owner,
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provided Owner has previously provided to Marriott all information reasonably
necessary (or as reasonably requested by Marriott) in order for Marriott to make
its decision. Marriott's failure to approve or disapprove such successor Lessee
within ten (10) business days shall be deemed to constitute Marriott's approval
of such replacement to Lessee.
6. Option to Cure Default.
----------------------
(a) Subject to the provisions of this Agreement, including Section 5 above,
Owner shall have the option, following receipt by Owner of notice from Marriott
of a default by Lessee under the Management Agreement (including, without
limitation, any breach or default referred to in Section 15 hereof), to cure any
such breach or default of Lessee under the Management Agreement, including, if
necessary, the commencement and prosecution of eviction proceedings against
Lessee and the replacement of Lessee as tenant to the extent permitted under the
Lease and this Agreement, and Marriott agrees to accept the performance of Owner
in lieu of the performance of Lessee and to keep the Management Agreement in
full force and effect, subject to the terms thereof. Notwithstanding the
foregoing, no cure by Owner as provided above shall be effective unless
completed or commenced and pursued within the time periods and otherwise in
accordance with the provisions of [Section 16.02] of the Management Agreement;
provided, however, that any default which is, by its nature, susceptible of
being cured by Owner only by having possession of the Hotel shall be deemed
cured by Owner terminating the Lease to the extent permitted thereunder and
assuming all of the rights and obligations of Lessee hereunder and under the
Management Agreement. Marriott shall not exercise any right to terminate the
Management Agreement or any other rights or remedies available under the
Management Agreement or at law or in equity for breach of the Management
Agreement by Lessee unless and until Marriott has notified Owner of such breach
or default and given Owner the time described above to cure such breach or
default.
(b) Subject to the provisions of this Agreement, including Section 5 above,
Lessee shall have the option, following receipt by Lessee of notice from
Marriott of a default by Owner under the Management Agreement with respect to
any Retained Obligations or Continuing Obligations, to cure any such breach or
default of Owner under the Management Agreement, and Marriott agrees to accept
any such performance of Lessee in lieu of the performance of Owner and to keep
the Management Agreement in full force and effect, subject to the terms thereof.
Notwithstanding the foregoing, no cure by Lessee as provided above shall be
effective unless completed or commenced and pursued within the time periods and
otherwise in accordance with the provisions of [Section 16.02] of the Management
Agreement. Marriott shall not exercise any right to terminate the Management
Agreement or any other rights or remedies available under the Management
Agreement or at law or in equity for breach of the Management Agreement by
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Owner with respect to Retained Obligations or Continuing Obligations unless and
until Marriott has notified Lessee of such breach or default and given Lessee
the time described above to cure such breach or default.
7. Lease Modification/Consent.
--------------------------
(a) Neither Owner nor Lessee shall agree to any amendment or modification
of the Lease which would materially and adversely restrict, limit or interfere
with the rights of Marriott hereunder or under the Management Agreement without
the prior written consent of Marriott, and no amendment or modification shall be
effective if made in breach hereof. In no event shall any amendment or
modification of the Lease (i) result in a term of the Lease which would be
shorter than the then existing term of the Lease, (ii) limit or otherwise
purport to reduce, or modify in any manner adverse to Marriott, Owner's
responsibility for the Retained Obligations or Continuing Obligations, or (iii)
amend or modify of the following provisions of the Lease: Section 1.32, Section
3.1.6.(a)-(f), Section 4.4, Section 5.1.2, Article 6, Section 17.3 and the
definitions of any terms used in any such Sections or Articles, without the
prior written consent of Marriott. Lessee agrees to deliver copies of any
amendments or modifications of the Lease to Marriott promptly following the
execution and delivery thereof, and this Agreement shall continue in force and
effect as to the Lease as amended or modified in accordance with the provisions
hereof.
(b) Without the prior written consent of Marriott, in its sole and absolute
discretion, Lessee shall not sublease all or any portion of the Hotel, or assign
the Lease, directly or indirectly, except it may assign the Lease to a single
purpose limited liability company which is wholly owned, directly or indirectly,
by Crestline Capital Corporation and in which Marriott is a non-equity member
with rights which are no less favorable to Marriott than that which it has as a
non-equity member in Lessee and which is organized and operated pursuant to an
operating agreement not substantially different from the Operating Agreement
("Approved Affiliate"). Any sublease to any Person, or any assignment to any
Person other than an Approved Affiliate, without Marriott's prior written
consent, in its sole and absolute discretion, shall be null and void.
8. Approvals and Consents. Marriott shall seek all approvals and/or
----------------------
consents required from "Owner" under the Management Agreement, and elections to
be made by "Owner" under the Management Agreement, from Lessee, whether or not
such approvals, consents and elections fall within the Reserved Rights and/or
Continuing Rights. Marriott shall be entitled to rely and act on all approvals
and/or consents obtained or received from, or elections made by, Lessee under
any provisions or requirements of the Management Agreement, without any
obligation to confirm the granting of any approval or consent or the making of
such election by
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Owner which may be required under the Lease or to obtain the signature of any
representative of Owner, and Marriott shall not be required to grant any
additional time for Owner to instruct the Lessee with respect to such matters.
Notwithstanding anything set forth herein to the contrary, the foregoing shall
not release Lessee from any consent requirements or other obligations it may
have to Owner under the Lease with respect to granting such approvals and/or
consents or making such elections.
9. Change in Control of Lessee.
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(a) As provided in the Lease, in the event of any Change in Control (as
defined in the Lease), Owner shall have the right to terminate the Lease, which
termination shall be a Lease Termination governed by the provisions of
Section 5.
(b) If a Change in Control occurs which results in Lessee being in control
of or controlled by persons who (i) have been convicted of felonies in any state
or federal court, or (ii) are engaged (or affiliated with any person or entity
engaged) in the business of operating (as distinguished from owning) a branded
hotel chain having five thousand (5,000) or more guest rooms in competition with
Marriott International, Inc., its successors and assigns, then Marriott shall
have the right, but not the obligation, in its sole and absolute discretion, to
require Owner to terminate the Lease. Upon such notice, Owner shall immediately
undertake such actions as may be necessary to terminate the Lease and must
within two hundred seventy (270) days after such written notice by Marriott (the
"Transition Period"), effect a Lease Termination and Lease Succession in
accordance with Section 5. The Transition Period may be extended for one (1)
additional period of ninety (90) days if Marriott does not approve a proposed
successor lessee designated by Owner or if, at the time of the expiration of the
initial term of the Transition Period, Owner is engaged actively in negotiations
with a proposed successor Lessee which Marriott has agreed in an Approved
Tenant. In the event that a Lease Succession has not occurred prior to the end
of the Transition Period, the Lease shall terminate at the end of the Transition
Period and all of "Owner's" rights, benefits, privileges and obligations under
the Management Agreement with respect to periods after such termination shall
automatically revert to Owner. With respect to Lessees not directly or
indirectly controlled by CCC, for purposes of this Section 9, the definition of
"Change of Control" shall include the acquisition by Lessee or any Affiliate
thereof of a branded hotel chain having five thousand (5,000) or more guest
rooms in competition with Marriott International, Inc. and its successors. [The
Change of Control definition in the Lease for future lessees that are not
controlled by CCC shall be modified to reflect this provision].
(c) At any time during the Transition Period, upon Marriott's prior written
instruction, which instruction Marriott shall have the right but not the
obligation to issue in its sole and absolute discretion, Owner shall terminate
the Lease immediately and enter into a new lease with Marriott or its affiliate
for the then remaining term of the Transition Period, which
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lease shall be identical to the Lease except that its term shall be for the then
remaining term of the Transition Period. In no event shall Marriott be liable or
responsible for any action or inaction of the Lessee occurring prior to the date
of the execution of such new lease.
10. Rejection of Lease Following Bankruptcy of Owner. In the event that a
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"Default" described in [Section 16.01 A, B or C] of the Management Agreement
("Bankruptcy") shall have occurred on the part of Owner, and thereafter the
Lease shall be rejected on behalf of Owner under Section 365 of the United
States Bankruptcy Code ("Code") or any other applicable law or authority
("Rejection"), Lessee shall promptly notify Marriott in writing of such
Rejection and Lessee shall, as directed by Marriott, either treat the Lease as
terminated by such Rejection or retain its rights under the Lease as permitted
by the Code or other applicable law or authority.
11. Rejection of Management Agreement Following Bankruptcy of Lessee. As
----------------------------------------------------------------
provided in the Lease, Owner shall have the right to terminate the Lease in the
event that the Management Agreement is terminated for any reason other than a
default thereunder by Marriott or by Owner. In the event that the Management
Agreement is terminated as the result of a Rejection by Lessee following
Bankruptcy of Lessee, the Management Agreement will remain effective with
respect to Owner and Owner shall, if so directed by Marriott (but only to the
extent such right may be exercised under the Code and other applicable law and
authority), terminate the Lease, subject to the provisions of Section 5 hereof.
12. Owner and Lessee Will Not Join in Involuntary Petitions. Owner and
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Lessee each agree that it will not join in any involuntary petition against the
other under the Code or any other similar federal or state law providing for
debtor relief without the consent, in writing, of Marriott.
13. Notice of Default. So long as the Management Agreement is in effect,
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(a) each of Owner and Lessee shall send a copy to Marriott of any notice of
default, or any notice of any intention to terminate the Lease, that either
gives under the Lease, and (b) Marriott shall send a copy of any notice of
default under the Management Agreement (including, without limitation, any
breach or default referred to in Section 15 hereof), or any notice of any
intention to cancel or terminate the Management Agreement, to Lessee and Owner;
any such notice shall be in accordance with the notice provisions set forth
herein, and any such notice shall not be effective until received by each of
Lessee and Owner.
14. Information for Owner. The parties agree that the following reports and
---------------------
electronic feeds of information currently provided to Owner shall be provided to
Owner and Lessee during the term of the Lease: (1) Project status reports from
"Architecture and
12
Construction Projects" (at least once each Accounting Period); (2) "Architecture
and Construction Projects" feed detailing the billing and cost information for
the Hotel (at least once during each Accounting Period); and (3) "Authorized
Expenditure" feed which details all capital expenditures made by the Hotel (at
least once each week).
15. Defaults. The parties agree that during the term of the Lease
--------
(subject to early termination in accordance with its terms), an event with
respect to either Owner or Lessee described in Section [16.01 A, B or C] of the
Management Agreement shall constitute a Default with respect to "Owner" under
the Management Agreement, and a breach by Owner or Lessee of any covenants,
undertakings, obligations or conditions under this Agreement shall constitute a
Default with respect to "Owner" under Section [16.01 E] of the Management
Agreement.
16. General.
a. Multiple Counterparts. This Agreement may be executed in multiple
---------------------
counterparts, each of which shall be deemed an original.
b. Modification. This Agreement may not be modified orally or in any
------------
other manner other by an agreement in writing signed by the parties hereto.
c. Notices. Notices, statements and other communications to be given
-------
under the terms of this Agreement and the Management Agreement shall be in
writing, and shall be either (i) delivered by hand against receipt, or (ii) sent
by certified or registered mail, postage prepaid, return receipt requested, or
(iii) sent by either Airborne Express (or other nationally recognized commercial
delivery service) or by "fax" machine (provided that, in either case, a
confirmatory copy is thereafter sent by certified or registered mail):
If to Owner:
If to Lessee:
13
If to Marriott: [Marriott International/Marriott Hotel Services, Inc.]
00000 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attn.: Law Department (Hotel Operations)
or at such other address as is from time to time designated by the party
receiving the notice. Any such notice which is properly mailed, as described
above, shall be deemed to have been served as of three (3) business days after
said posting. The parties hereby agree that during the period in which Owner's
rights under the Management Agreement are assigned to Lessee under Section 1
hereof, the address for notices to "Owner" under the Management Agreement shall
be the address for Lessee under this Agreement.
d. Term. The term of this Agreement shall commence on the Commencement
----
Date (as defined in the Lease) and shall terminate on the date of termination of
the Management Agreement in accordance with its terms; provided, however, that
the rights and obligations of Lessee hereunder shall terminate on the earlier to
occur of the expiration or termination of the Lease or the Management Agreement.
e. No Waiver. No failure by any party hereto to exercise, and no delay
---------
in exercising, any right under the Management Agreement or this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right preclude any other or further exercise thereof or the exercise of any
other right.
f. Remedies Cumulative. The rights and remedies of any party hereto
-------------------
provided in the Management Agreement or this Agreement are cumulative and are in
addition to, and not exclusive of, any rights or remedies provided by law or
equity.
g. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the jurisdiction in which the Hotel is located.
h. Severability. The invalidity, illegality or unenforceability of any
------------
one or more phrases, sentences, clauses or sections contained in this Agreement
shall not affect the validity, legality or enforceability of the remaining
portions of this Agreement.
i. Recordation of Memorandum. The parties shall execute simultaneously
-------------------------
with this Agreement sufficient copies of a "Memorandum of Management Agreement"
in recordable
14
form satisfactory to all parties. The Memorandum shall be recorded promptly
following the effective date of this Agreement in the jurisdiction in which the
Hotel is located. Any cost of such recordation shall be paid for by Owner. Upon
termination of the Management Agreement in accordance with its terms, the
parties agree to execute and deliver to each other a recordable form of
termination of the Memorandum in form reasonably satisfactory to each party.
j. Successors and Assigns. The rights and obligations hereunder of the
----------------------
parties hereto shall bind and inure to the benefit of their respective
successors and permitted assigns.
k. Captions. The captions and headings of the sections and subsections
--------
of this Agreement are for purposes of convenience and reference only and shall
not limit or otherwise affect the meaning hereof.
l. Time of the Essence. Time shall be of the essence in the performance
-------------------
of this Agreement.
m. Incorporation of Recitals. The recitals hereto are incorporated
-------------------------
herein as part of this Agreement.
n. Definitions. All capitalized terms used herein and not otherwise
-----------
defined herein shall have the meanings specified therefor in the Management
Agreement.
o. Confidentiality. The parties hereto agree that the matters set forth
---------------
in this Agreement are strictly confidential and each party will make every
effort to ensure that such matters are not disclosed to any outside person or
entities (including the media) without the written consent of the other party;
provided, however, that such consent will not be required with respect to (i)
legally required filings and other disclosures mandated by applicable law, (ii)
disclosure to any prospective and existing lenders, prospective and existing
ground lessors, or any prospective purchasers of the Hotel, and (iii)
disclosures to the parties' respective outside legal counsel and financial
advisors, provided that such persons are informed of the confidential nature of
such matters and instructed to keep them confidential.
[Continued on next page.]
15
IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to execute this Agreement as of the date first above written.
WITNESS: OWNER:
By:
-----------------------------------
Name:
---------------------------------
LESSEE:
By:
-----------------------------------
Name:
---------------------------------
MARRIOTT:
By:
-----------------------------------
Name:
---------------------------------
16
EXHIBIT A
Lease
-----
17
EXHIBIT B
Management Agreement
--------------------
18
EXHIBIT C-1
Retained Obligations
--------------------
19
EXHIBIT C-2
Reserved Rights
---------------
20
EXHIBIT C-3
Continuing Rights
-----------------
21
EXHIBIT C-4
Continuing Obligations
----------------------
22
